Are you looking at investing in property?
One of the most important steps to take beforehand is securing a mortgage pre-approval.
This pre-approval means that a bank or lender has accepted your request to borrow funds from them to secure a property. This gives you the go-ahead to make offers or bid, and allows you to set how much you can spend.
To obtain a property mortgage pre-approval, the bank or lender will determine if you are a viable candidate for the loan by investigating your assets and credit history.
So, how important is a pre-approval when buying real estate, really?
Why you should secure finance pre-approval
Here are some of the advantages of having a pre-approval before searching for and purchasing property:
- Set expectations for yourself
When the lender provides you with the amount they will lend you, you’re able to set a benchmark for your spending. This will help you determine your scope of choices and eliminate unrealistic options.
- It makes you an attractive buyer
A buyer with a secured pre-approval is preferred by sellers and real estate agents, as it shows that you are serious about purchasing and are less likely to withdraw due to a lack of financing.
- Your final loan will be organised faster
A pre-approval is only an initial agreement – not the mortgage itself. However, if you go through with the final loan to purchase property, a pre-approval will make the process faster.
- There’s no cost to you
Most lenders offer pre-approvals for free and they will be valid for a certain amount of time, so you can begin looking around.
- It empowers your Buyer’s Agent
When you have a pre-approval, your Buyer’s Agent has a better indication of what’s realistic, and can hunt for properties that both match your budget and your preferences.
6 tips to improve your chances when applying for a home loan
I know some people can get a bit nervous or frustrated when applying for a mortgage pre-approval from banks or lenders. However, if you’re serious about buying a home, it’s worth getting this step done so you can begin looking for your ideal property.
To help you, here are a few tips I would suggest:
1) Know your limit
Set a benchmark on the amount that you can actually afford to repay. Keep in mind that interest rates can fluctuate over time.
2) Stability is key
A record of you having stable employment can increase your chances of getting approved for a home loan. Having a stable rental history can also help you too.
3) Credit cards
Having a high credit card limit can affect your potential borrowing capacity. If possible, pay off all your cards, reduce the number of cards you have and set their limits lower.
4) Budget, budget, budget!
At least 6 months before applying, follow a realistic budget to demonstrate that you are a responsible spender and can pay the requirements of your loan.
5) Get your accounts sorted
Ensure that you have no record of late payments and overdrawn accounts. Banks and lenders usually check your account statements for the last 3 to 6 months.
6) Seek help!
I know many reputable mortgage brokers in the industry that may be able to help you secure a pre-approval. Let me know if you want me to put you in touch with them so I can start looking for the ideal property to maximise your returns.
How can Worth help you make the best property investment choice?
Worth Property Investing is your property buying partner, ensuring you only make the best investment choices, while saving you a lot of time.
As your trusted Buyer’s Agent, I provide you with a tailored service catered around your personal investment goals.
With my passion, experience and expertise in assisting people along their property investment journeys, I work with you to find the right home for you.
Let’s get in touch today for an initial chat. Click here
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